Court Ruling in Favor of Hospital Price Transparency
Healthcare price transparency has cleared its last major hurdle before implementation on January 1st. On Tuesday, the U.S. Court of Appeals for the District of Columbia ruled against the hospital association's legal challenge to price transparency, affirming the district court's decision in June.
Defeating the hospital association's appeal to block price transparency's implementation is a major victory for American consumers. Starting Friday, they will be able to know real hospital prices, including discounted cash and secret negotiated rates. This information will empower patients and employers to shop for less expensive care and avoid pervasive price gouging, overbilling, and ruinous healthcare bills. No longer will they be blinded from and blindsided by healthcare prices. Clear prices before care will usher in a functional, competitive healthcare marketplace that will put downward pressure on prices while improving quality.
Hospitals are unlikely to appeal this decision to the Supreme Court, and they'd likely find an unwelcome reception from the justices if they did. This ruling also dismisses a separate emergency motion recently filed by the hospital industry to prevent price transparency from taking effect. The opinion is a shot across the bow of the health insurance industry, which may file suit to try to block health insurance price transparency that begins in 2022.
The Appeals Court decision is not a surprise. As I wrote here following the lawsuit's oral arguments in October, the judges were skeptical of the hospital association's arguments to keep their prices hidden. The association's position that hospital prices are "unknowable" and too confusing for consumers to understand was baffling and, even more, insulting to everyday Americans who obviously know how to shop. Even further perplexing was why hospitals were fighting to keep their patients ill-informed on prices rather than well-informed. The judges clearly saw through this charade as evidenced by yesterday's decision in favor of consumers knowing actual prices before they get care.
Hospital representatives tried to argue that their chargemaster disclosures fulfill the Affordable Care Act's mandate to publish "standard charges." Yet the Court pointed out that since virtually no one pays chargemaster prices, they cannot be considered "standard." It also noted that since chargemaster rates are the "maximum" that can be paid, they cannot, by definition, be "standard."
Though expected, the decision is nevertheless monumental. The judges' pro-consumer, pro-competition ruling is a victory for consumers on all points. It provides a strong judicial backstop to legislative and executive branch price transparency requirements. The hospital industry's arguments to maintain gag orders, keep payment details in the dark, and prevent consumers from their right to know actual prices "miss the mark," wrote the judges.
This ruling gives all American consumers a reason to celebrate this New Year's Eve. Empirical and anecdotal evidence suggest that price transparency will reduce their healthcare costs by 30 to 50 percent. A paper published last year, for instance, by economists Art Laffer and Larry Van Horn finds that cash prices for healthcare are, on average, 39 percent less than insurers' negotiated rates.
The decision marks a fantastic end to a challenging year. Now, nothing stands in the way of hospital price transparency's implementation starting New Year's Day. Knowing actual prices and benefiting from competition will empower American healthcare consumers to make better health decisions and generate substantial savings for generations to come. As a result, they will have more money in their wallets and savings accounts, and businesses can save on lowered costs of coverage, which can be used, instead, to increase bonuses, wages, and hiring. Let's toast to this consumer-driven American healthcare revolution.
Cynthia A. Fisher is a life sciences entrepreneur, founder and chair of PatientRightsAdvocate.org, and the founder and former CEO of ViaCord Inc.